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Houzz Report Shows Optimism for 2025 Despite Industry-Wide Revenue Decline in 2024

Furniture World News Desk on 2/7/2025


Houzz Inc. has released the 2025 U.S. Houzz State of the Industry report, offering an outlook for the residential construction and design sectors based on insights from more than 1,500 industry professionals. The findings indicate optimism for 2025, with more than 60% of firms in the construction and design sectors expecting business growth. This follows a year in which firms reported declines in revenue and profitability, primarily due to fewer projects and reduced budgets.

“Home professionals are entering 2025 with renewed confidence and expectations for growth in both revenue and profitability after navigating two difficult years,” said Marine Sargsyan, Houzz staff economist. “Pros report that they’ve implemented new processes for operational efficiency and client communication and made strategic investments in technology to address the challenges they faced last year. This will better position them for an anticipated increase in demand, enhance their resilience amidst potential tariffs, and leverage expected improvements in both local and national economic conditions.”

Revenue Expectations and Business Strategies

Firms in both the construction and design sectors anticipate higher revenue growth in 2025 than they initially expected for 2024. Specialty contractors and general contractors project average revenue growth of 12.4% and 11.3%, respectively, while architects, design-build firms, interior designers, and landscaping firms expect growth rates between 9.0% and 9.4%. Businesses plan to achieve these targets by securing larger-budget projects, adjusting pricing structures, and expanding product and service offerings.

Investments in Efficiency and Technology

In 2024, industry professionals prioritized operational improvements:

  • Efficiency enhancements: 40% of architects, 42% of specialty contractors, and 40% of design-build firms invested in streamlining processes.
  • Client and team communication: This was a key focus for design-build firms (45%), general contractors (44%), and interior designers (39%).
  • Technology utilization: 20% of architects, 16% of interior designers, and 16% of design-build firms focused on maximizing returns from technology investments.

Nearly all businesses reported using software for operations, client engagement, workflow automation, payments, and marketing. Among industry groups, 84% of architects use drafting and rendering software, while nearly 40% of design-build firms and specialty contractors rely on cost and bid estimation tools.

Key 2025 Industry Trends

  • Specialty contractors lead in confidence: 73% of specialty contractors have a positive outlook for 2025, followed by 70% of interior designers, 68% of design-build firms, 61% of general contractors, and 60% of architects.

  • Increased demand expected: More than half of businesses anticipate higher demand for their services, with confidence highest among specialty interior service firms (77%), architects (67%), and interior designers (58%).

  • Economic improvements anticipated: More firms expect national and local economic conditions to improve (37%-57% nationally, 38%-50% locally) than decline, a shift from the uncertainty reported last year.

  • Labor shortages persist: Six of the seven industry groups anticipate continued labor shortages, with rising labor costs expected, particularly among specialty contractors (57%) and design-build firms (56%).

  • Product and material costs projected to rise: More businesses expect costs to increase in 2025 than decrease, with the highest concern among interior designers (59%), specialty interior service firms (59%), general contractors (58%), design-build firms (56%), and specialty contractors (56%).

  • 2024 revenue and profitability declines: Businesses across all sectors reported the largest annual revenue drop since 2014 (-0.3% to -7.2%). Profit declines were most widespread among landscaping firms (60%) and specialty interior service firms (56%).

The complete 2025 U.S. Houzz State of the Industry report is available here.

 

 

About Houzz
Houzz, the leading platform for home building, remodeling and design, empowers industry professionals and homeowners with the tools they need to make every project a success. The company’s cloud-based, AI-powered project management and design software, Houzz Pro (houzz.com/pro), helps pros win projects, collaborate with clients and teams, and run their businesses efficiently and profitably. Houzz Pro also provides their clients with 24/7 access to project information, 3D visualizations and financial tools. Using Houzz, people can find ideas and inspiration, hire professionals and buy products. The Houzz platform is used by more than 3 million construction and design industry professionals and over 70 million homeowners and home design enthusiasts around the world. Houzz and Houzz Pro are available on the web and as top-rated mobile apps. For more information, visit houzz.com.